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Union cabinet imposes 21% import duty on power equipment

20 Jul 2012 Evaluate

Keeping the long pending demand of domestic power equipment manufacturers, the union cabinet has finally decided to slap 21% duty on imports of power equipment. The Cabinet has approved 5% basic customs duty, 12% counter-veiling duty and 4% special additional duty on import of power gear.

In May, the Cabinet had deferred the decision on imposition of duty on power equipment. Earlier this month, on Prime Minister's Office direction, the Power Ministry had floated a proposal seeking higher duty on import of equipment for the power sector. There were differences on the quantum of basic customs duty that can be slapped on overseas power gear among three ministries -- Power, Commerce and Industry, and Heavy Industry, while the Power Ministry pitched for 5% customs duty, Commerce and Heavy Industry ministries sought 15% and 10% respectively.

At present, equipment imported for projects of less than 1,000 MW capacity attract 5% customs duty, while those above that enjoy exemption. The latest decision was taken mainly to protect domestic companies from cheap Chinese shipments and it has been hailed by the Indian manufacturers, they have stated that imposing 21% import duty on power equipments will help level the playing field for Indian companies. On the same time the power generating companies have expressed disappointment at the decision and said that the move would raise equipment prices and raise electricity tariffs.

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